Gold is at US$ 2525, and it has advanced from an yearly low of US$ 1985, that is by about US$ 440. The general bullishness in the markets arising from the highprobability of rate cuts in the US, is further aided by movement into gold by the central banks as also its safe haven status. The rise in the value of gold by 25 % this calendar year itself is a reason for many to include gold progressively in the investment portfolios. The advance to US$ 2500 has been quite steady and without any meaningful correction in prices. The consistent demand for gold from central banks and the resultant rise in the composition of forex reserves of the gold component has created an air of impression that gold is being demanded
by central banks in substitution of assets denominated in currencies like the US Dollar. This gains further currency because the impending decline in US yields, as the Fed rate cut starts is a certainty going by the past trends. The impact of the prolonged period of high rates and high inflation could also result in some decline in growth, the signs of which is already visible in some of the numbers especially growth and employment. These factors support higher gold prices. However, the fact that the market is already pricing in some of these factors may restrict the rise to around US$ 2600 or somewhere close to that.
